Kempen European High Dividend Fund N.V. N · EURONEXT:KEHDF
Kempen European High Dividend Fund N.V. N — Van Lanschot Kempen — H1 2019 Earnings Presentation
33 slides from Kempen European High Dividend Fund N.V. N's earnings presentation, Aug 27, 2019
Slide 1: 2019 half-year results
2019 half-year results Net profit over €83m and capital return proposal 27 August 2019
Slide 2: We want to be a leading wealth manager in our markets
We want to be a leading wealth manager in our markets Continue with • Well-capitalised, profitable wealth manager with a strong position in the market our wealth • Knowledge and experience, personal, client-focused approach, unique combination of activities management and track record set us apart f
Slide 3: To deliver on our promises we have taken clear actions
To deliver on our promises we have taken clear actions Accelerate • Net inflows of AuM and favourable stock market performance, adding €16.1bn to client assets • Start of €9.0bn fiduciary mandate growth – • Ongoing scan for acquisitions in existing and contiguous markets to accelerate our growth org
Slide 4: From responsible to sustainable wealth manager – highlights H1 2019
From responsible to sustainable wealth manager – highlights H1 2019 Signed up to financial AuM at Private Increase in number of sector commitment to Banking invested in approved fund managers report on climate impact sustainable or impact that are scored on their of loan portfolio and investing solu
Slide 5: Our positioning in a changing environment
Our positioning in a changing environment Key themes Our positioning • Focus on wealth management, leading to less dependence on interest Low interest rates impact our income interest income • Keep Private Banking loan portfolio stable • Provide integrated wealth management solutions for private, Ma
Slide 6: 2019 half-year results
2019 half-year results
Slide 7: Net result up to €83.6m due to significant book profits
Net result up to €83.6m due to significant book profits Net result €83.6m (H1 2018 €39.3m) Commission income €142.2m (-5%) Underlying net result €92.5m Interest €84.7m (-6%) (H1 2018 €47.2m) Book profits* €52.2m Operating expenses Efficiency ratio 75.5% €190.4m (-9%) (H1 2018: 81.1%) Client assets €
Slide 8: Highlights H1 2019
Highlights H1 2019 Over €1.5bn in sustainable New payments platform and Introduction of Next steps for Evi AuM at Private Banking payments app launched ‘Groenhypotheek’ determined Successful launch European Start of €9.0bn fiduciary Adviser in €1.4bn Dutch Capital return proposal of Private Equity F
Slide 9: Overview net result
Overview net result €m H1 2019 H1 2018 % chang e Commission 142.2 149.9 -5% Interest 84.7 90.0 -6% Other income 25.2 18.3 38% Income fr om op er ating activities 252.1 258.2 - 2% Operating expenses -190.4 -209.3 -9% Gr oss r esult 61.7 48.9 26% Loan loss provision 7.5 3.5 114% Other impairments -0.1
Slide 10: Higher net result driven by book profits and sharp decline in costs
Higher net result driven by book profits and sharp decline in costs Key drivers of net result €m incl. AIO II incl. VLC & Partners • Decline in commission driven by a combination of slightly lower AuM volumes, change in AuM composition at Asset Management and lower commission at Merchant Banking • L
Slide 11: Cost-saving measures lead to 9% fall in operating expenses
Cost-saving measures lead to 9% fall in operating expenses Operating expenses €m • H1 2019 costs significantly below H1 2018 due to cost-saving measures • Focus on costs reflected mainly in lower staff costs, consultancy fees and IT costs • Measures initiated in 2018 required additional restructurin
Slide 12: H1 2019 net result of €83.6m
H1 2019 net result of €83.6m €m Total Private Banking Evi Asset Management Merchant Banking (incl. Other) 83.6 19.0 19.1 19.8 41.0 39.3 6.9 7.3 8.0 5.0 3.5 2.5 -2.5 -1.6 -4.2 H1 H2 H1 H1 H2 H1 H1 H2 H1 H1 H2 H1 H1 H2 H1 2018 2018 2019 2018 2018 2019 2018 2018 2019 2018 2018 2019 2018 2018 2019 12
Slide 13: Private Banking client assets rose 8% to €33.1bn
Private Banking client assets rose 8% to €33.1bn Private Banking client assets* Net AuM inflow at Private Banking € bn € bn • Client assets rose to €33.1bn due to positive market performance and net inflow of savings and deposits • Slight outflow of €0.1bn reflects clients being more hesitant to inv
Slide 14: Net inflows at Asset Management driven by fiduciary management
Net inflows at Asset Management driven by fiduciary management AuM Asset Management Net inflow AuM at Asset Management € bn € bn • Net inflow driven by new fiduciary mandates, mainly St. Pensioenfonds PostNL (€9.0bn) • Small outflow (€0.2bn) from investment strategies mainly as a result of the decis
Slide 15: AuM margin Private Banking fairly stable, decline at Asset Management due to mix effect
AuM margin Private Banking fairly stable, decline at Asset Management due to mix effect AuM margin – Private Banking AuM margin – Asset Management bps bps • In 2017, Private Banking’s AuM margin was relatively high due to higher transaction provisions and the UBS portfolio acquisition that came in d
Slide 16: Evi’s net result improved, client assets relatively stable
Evi’s net result improved, client assets relatively stable Evi’s AuM Evi’s client assets €m €m • AuM increase due to positive market performance • Operating expenses fell by €3.0m compared with H1 2018, due to lower marketing and IT costs • Net result amounted to -€1.6m (H1 2018: -€4.2m) 16
Slide 17: Next steps determined for Evi
Next steps determined for Evi Evi is ready for a new phase Focus on mass affluent market • Mass affluent segment • Evi is positioned as a is a large market strong brand offering opportunities for growth • Over 16,000 AuM clients in Netherlands • Increasing wealth and Belgium management needs Wealth
Slide 18: Solid results at Merchant Banking
Solid results at Merchant Banking Commission Selection of H1 2019 deals €m • After a very strong 2018, H1 2019 showed solid results • Decrease in commission income visible across the business • Lower results from structured products • Net result fell to €3.5m (H1 2018: €8.0m) 18
Slide 19: Margin pressure due to low interest rate environment
Margin pressure due to low interest rate environment Interest Interest margin (12-mth moving average) €m % • Margin pressure as a result of low interest rate climate • Interest income and charges were lower than in 1H 2018, due to a smaller corporate banking loan portfolio and lower income from comp
Slide 20: Loan portfolio relatively stable, slight increase mortgage portfolio Private Banking
Loan portfolio relatively stable, slight increase mortgage portfolio Private Banking €m Lo an Lo an % c hange Impaired P ro vis io n Impaired Co verage po rtfo lio po rtfo lio lo ans ratio ratio 30/06/2019 31/12/2018 Mortgages 5,916 5,756 3% 69 7 1.2% 10% Other loans 1,992 1,793 11% 112 70 5.6% 63%
Slide 21: Income from securities and associates increases mainly due to book profit
Income from securities and associates increases mainly due to book profit Income from securities and associates €m €m Book value Income 30/06/2019 H1 2019 VLP (minority interests) 49.6 7.5 Bolster Investments Coöperatief U.A. 17.4 0.9 Co-investments in own products 103.5 8.5 Other equity investments
Slide 22: Lower result on financial transactions
Lower result on financial transactions Results on investment portfolio Other results Total result on financial transactions €m €m €m • Result on financial transactions decreased by € 9.8m to - €8.1m mainly due to a lower result on hedges and model adjustments • There were fewer sales from the invest
Slide 23: Net release of loan loss provisions thanks to positive economic conditions
Net release of loan loss provisions thanks to positive economic conditions Loan portfolio (excluding provisions) Additions to loan loss provisions at 30/06/2019 100% = €8.9bn €m - 14 bps* - 39 bps* - 33 bps* • Mortgages at Private Banking increased, as well as other loans • Corporate banking loans c
Slide 24: Strong capital position and capital return proposal
Strong capital position and capital return proposal Common Equity Tier 1 ratio (fully loaded) Capital return and dividend % €m • The CET 1 ratio recorded a strong increase from 21.4% to 22.7% • Our robust capital position enables us to propose a capital return to shareholders of €1.50 per share • If
Slide 25: Overview of 2023 financial group targets
Overview of 2023 financial group targets Common Equity Tier 1 ratio* Dividend pay-out ratio** % % 50-70% 15-17% 18.6% 20.3% 21.4% 22.7% 64% 56% 61% 16.3% 36% 2015 2016 2017 2018 H1 2023 2015 2016 2017 2018 H1 2019 2019 Efficiency ratio Return on Common Equity Tier 1** % % 70-72% 10-12% 74.4% 79.6% 7
Slide 26: Net result up to €83.6m due to significant book profits
Net result up to €83.6m due to significant book profits Net result €83.6m (H1 2018 €39.3m) Commission income €142.2m (-5%) Underlying net result €92.5m Interest €84.7m (-6%) (H1 2018 €47.2m) Book profits* €52.2m Operating expenses Efficiency ratio 75.5% €190.4m (-9%) (H1 2018: 81.1%) Client assets €
Slide 27: Appendix
Appendix
Slide 28: Overview net result
Overview net result €m H1 2019 H2 2018 % chang e H1 2018 % chang e Commission 142.2 143.3 -1% 149.9 -5% Interest 84.7 85.6 -1% 90.0 -6% Other income 25.2 12.0 110% 18.3 38% Income fr om op er ating activities 252.1 241.0 5% 258.2 - 2% Operating expenses -190.4 -187.1 2% -209.3 -9% Gr oss r esult 61.
Slide 29: Key figures H1 2019 by segment
Key figures H1 2019 by segment €m Private Evi Asset Merchant Other Total Banking Management Banking Commission income 62.9 2.5 48.4 27.4 1.0 142.2 Interest income 77.0 1.4 0.0 -0.1 6.3 84.7 Other income 0.6 - 0.1 -1.3 25.9 25.2 Income from operating activities 140.5 3.9 48.5 26.0 33.2 252.1 Operatin
Slide 30: Decline in commission income across the business
Decline in commission income across the business Total commission Commission by segment €m €m 30
Slide 31: Financial and non-financial KPIs
Financial and non-financial KPIs Theme KPI A nnu al target H1 2019 Sc o re H1 2019 Sc o re 2018 1. CET 1 ratio (fully loaded) 15-17% 22.7% 21.4% F inanc ial and ris k 2. Return on equity (CET 1) 10-12% 12.9% 9.8% management 3. Efficiency ratio 70-72% 75.5% 79.4% Ethic s and 4. Percentage of employee
Slide 32: High scores on external ESG ratings
High scores on external ESG ratings 1st Sustainability certificates in our peer group of on responsible investment policy medium-sized banks and balance sheet screening 9th B rating Transparantiebenchmark: place in league table of assessed by Carbon Disclosure 250 entrants Project C+ rating A and A+
Slide 33: Disclaimer
Disclaimer Disclaimer and cautionary note on forward-looking statements This document may contain forward-looking statements on future events and developments. These forward-looking statements are based on the current insights, information and assumptions of Van Lanschot Kempen’s management about kn